Bitcoin price drops $200 after new ruling from Chinese regulators

While the ban on ICOs does not directly affect bitcoin, the news created negative market sentiment which is weighing on the prices of several virtual currencies, according to Charles Hayter, chief executive and founder of digital currency comparison website CryptoCompare.

“A rising tide lifts all boats but the opposite is also true – with generally bad news reverberating across the ecosystem all cryptos have turned red together,” he told CNBC via email.

However, Hayter added that the long-term effects of regulation are positive.